Crude oil futures dropped more than 3 percent on Friday for the decline in four days after U.S. data showed economic activity had the largest quarterly decline since 1982.
Crude futures reacted to the news that economic activity dropped more than expected in the fourth quarter, with the revised GDP growth rate now showing an annualized decline of 6.2 percent.
Economists expected GDP to shrink by a 5.4 percent annual pace in 2008's fourth quarter, according to an average of predictions from economists surveyed by Bloomberg.
Crude oil futures for delivery in April declined 3.23 percent or $1.46 to $43.76 a barrel in the New York Mercantile Exchange by 12:23 p.m. Friday. Earlier futures touched $42.83 a barrel.
On Thursday, oil futures had rallied 6.4 percent to the highest level in one month. But oil prices failed to advance further, also pressed by gains in the U.S. dollar against major world currencies. A stronger dollar reduces demand for commodities.
Brent crude futures for April declined 2.7 percent or $1.23 to $45.28 a barrel on London's ICE Futures Europe exchange.
Separately, the United Arab Emirates announced yesterday it will cut its April production by 15 percent to 17 percent, the Dow Jones Newswires reported. The country is the thirds biggest producer of oil in the Organization of Petroleum Exporting Countries.
The market took this as a sign that not only will we see continued good compliance from OPEC but also to expect further production cuts in the future, Phil Flynn, senior trader at Alaron Trading Corp. in Chicago said in a research note Friday.
OPEC is meeting on March 15 in Vienna, to decide whether or not cut output further.